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Economic Indicators

U.S. wholesale inventories rise strongly; first-quarter GDP seen revised slightly up

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© Reuters. FILE PHOTO: Cargo shipping containers are seen at a storage yard in Carson, California, U.S., March 11, 2022. Picture taken March 11, 2022 with a drone. REUTERS/Bing Guan

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By Lucia Mutikani

WASHINGTON (Reuters) -U.S. wholesale inventories increased solidly in March and the pace of accumulation in the prior month was stronger than previously reported, which could lead to a small upward revision to the first-quarter gross domestic product estimate.

The Commerce Department said on Monday that wholesale inventories rose 2.3% in March as reported last month. Data for February was revised higher to show stocks at wholesalers climbing 2.8% instead of the previously reported 2.6%.

Economists polled by Reuters had expected March inventories would be unrevised. Wholesale inventories advanced 22.0% in March on a year-on-year basis. Inventories are a key part of gross domestic product. Wholesale motor vehicle inventories accelerated 2.4% after rebounding 1.9% in February.

Wholesale inventories, excluding autos, rose 2.3% in March.

Inventory investment slowed in the first quarter from the October-December period’s robust pace, subtracting 0.8 percentage point from GDP last quarter. That combined with a record trade deficit to weigh on GDP, resulting in the economy contracting at a 1.4% annualized rate in the first quarter.

Following February’s upward revision, economists estimate that inventories subtracted 0.6 percentage point from GDP, which would trim the pace of decline in output to a 1.3% rate.

Economists had anticipated the rate of decrease in GDP would be raised to a 1.5% rate after data last week showed the surge in the trade deficit in March was bigger than what they said the government assumed in its snapshot of first-quarter GDP.

“The real change in inventories in the first quarter looks strong,” said Daniel Silver, an economist at JPMorgan (NYSE:JPM) in New York. “But this is still more modest than the fourth quarter change in inventories, and we still believe inventories weighed on GDP growth in first quarter.”

The government is scheduled to publish its first GDP revision later this month. The number could also be impacted by March business inventories data due next week as well as any revisions to March retail sales, industrial production, housing starts and durable goods orders data.

Sales at wholesalers increased 1.7% in March after gaining 1.5% in February. At March’s sales pace it would take wholesalers 1.22 months to clear shelves, unchanged from February.

With the Federal Reserve raising interest rates to curb inflation, demand is expected to cool. Some economists warn that this, in an environment of fractured supply chains, could create an inventory imbalance that could trigger a recession.

“The current supply-chain disruptions are making it difficult for businesses to manage their inventories,” said Matt Colyar, an economist at Moody’s (NYSE:MCO) Analytics in West Chester, Pennsylvania. “Therefore, it’s possible that businesses are caught with excess inventories in a couple of years as they over-order today to compensate for the delays.”

Economic Indicators

Ukraine removes fuel price restrictions to increase supply – economy minister

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© Reuters. FILE PHOTO: Drivers stay in line outside a petrol station as they try to buy fuel, amid Russia’s invasion of Ukraine, in Kyiv, Ukraine May 11, 2022. REUTERS/Viacheslav Ratynskyi

KYIV (Reuters) – Ukraine’s government has lifted restrictions on fuel prices to enable traders to import more and make up the shortage Ukraine is experiencing after Russian forces destroyed many storage facilities and logistics chains, the economy minister said on Tuesday.

“We … suspended price regulation in order to enable market operators to saturate the market … so that they will be able to deliver all the resources available on the European market, and not only from the European market,” Yulia Svyrydenko said in an online interview with Ukrainian television.

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Economic Indicators

Motor vehicles boost U.S. business inventories in March

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© Reuters. FILE PHOTO: An assembly worker of Ford Motor works on an F-series pickup truck at the Dearborn Truck Plant in Dearborn, Michigan, U.S., January 26, 2022. REUTERS/Rebecca Cook

WASHINGTON (Reuters) – U.S. business inventories increased slightly more than expected in March, lifted by a jump in motor vehicle stocks, government data showed on Tuesday.

Business inventories rose 2.0% after increasing 1.8% in February, the Commerce Department said. Inventories are a key component of gross domestic product. Economists polled by Reuters had forecast inventories rising 1.9%.

Inventories surged 14.7% on a year-on-year basis in March. Retail inventories increased 2.3% in March, instead of 2.0% as estimated in an advance report published last month. That followed a 1.6% increase in February.

Motor vehicle inventories rose 1.6% instead of 1.2% as estimated last month. They increased 1.4% in February. Retail inventories excluding autos, which go into the calculation of GDP, shot up 2.5%, rather than 2.3% as estimated last month.

Inventory investment slowed in the first quarter from the October-December period’s robust pace. That, together with a record trade deficit, weighed on gross domestic product, resulting in the economy contracting at a 1.4% annualized rate in the first quarter.

Wholesale inventories increased 2.3% in March. Stocks at manufacturers gained 1.3%.

Business sales rose 1.8% in March after climbing 1.2% in February. At March’s sales pace, it would take 1.27 months for businesses to clear shelves, unchanged from February.

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Economic Indicators

U.S. Retail Sales Kept Up Strong Growth in April, Keeping Fed Rate Hikes on Track

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© Reuters.

By Geoffrey Smith

Investing.com — The U.S. consumer kept spending in April, shrugging off concerns that high inflation and the looming prospect of an economic slowdown might act as a brake.

Retail sales grew 0.9% from March, and March’s data were revised up to show a gain of 1.4% from February, double the 0.7% initially reported. That left the annual rate of retail sales growth at a robust 8.2%.

Nor was that all down to rising prices for groceries and gasoline. Excluding food and energy costs, core retail sales grew 0.6%, more than the 0.4% predicted. Here, too, March sales were revised up to a gain of 2.1% from an initial 1.4%.

Financial markets took the data as a sign that the Federal Reserve will persevere with a string of hefty interest rate hikes over the course of the next few months. The yield on the interest-rate sensitive 2-year Treasury note rose 8 basis points to 2.64%, while the benchmark 10-Year yield rose 6 basis points to 2.94%.

S&P 500 futures, meanwhile, edged down 3 points but were still posting solid gains of over 1% for the overnight session.

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